Investment needed to create jobs: Vic govt

THE Victorian government made a decision to strengthen the state's finances so it could deliver infrastructure to improve the economy and the cost of living, Treasurer Michael O'Brien said.

Tuesday's state budget included billions of dollars for major infrastructure, including a rail link to boost capacity, a train line to the airport and the construction of the second stage of the East West Link road project.

Critics say it neglected the basics, with Opposition Leader Daniel Andrews saying it failed to focus on education, health and emergency services.

But Mr O'Brien said the budget was achieved by getting expenditure under control and that it would grow the economy.

"We made the decision that we wanted to strengthen Victoria's finances so we can afford the sort of job-creating infrastructure projects Victoria needs," Mr O'Brien said on Wednesday.

"We need these projects, they will create jobs, they will improve productivity in this state and we can afford them.

"If Labor wants to come in and try and spend the surpluses they will kill those projects."

Mr O'Brien said the investment in infrastructure was vital because as the mining sector moved from the investment phase to the production phase there would be a drop-off in economic activity.

"Improving infrastructure is one of the ways we're going to get the economy growing again," he said.

Infrastructure projects are expected to create thousands of jobs, including 3700 jobs from the Melbourne Rail Link, 3000 from the western section of the East West Link and 700 from the project to widen the CityLink tollway.

Mr O'Brien rejected opposition claims the Melbourne Rail Link would cause chaos for Southern Cross station and at South Yarra, saying the project was better than Labor's alternative.

"It will not require the digging up, and shutting down, of Swanston Street for years on end," Mr O'Brien said.

"Obviously any significant scale project will have some level of disruption but ours is far, far less damaging to the Melbourne economy and Melbourne jobs than what Labor's proposing."

The budget papers show Victoria has an operating surplus of $1.3 billion for 2014/15, and this would grow to $3.3 billion in 2017/18.

"You need to have strong surpluses, multi-billion dollar surpluses of that scale, in order to be able to deliver multi-billion dollar infrastructure projects," Mr O'Brien said.

Proceeds from the lease of the Port of Melbourne will also help to fund the infrastructure projects, he said.

The budget comes six months out from the state election in November, and Mr O'Brien said the government was in a competitive position.

"Victorians need to consider what sort of future they see for this state," he said.